TAYCA CORPORATION FY2027 Q1 Earnings Report

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Executive Summary

In FY2027 Q1, Teika achieved both double-digit revenue growth and cost efficiencies, resulting in higher revenue and profits. Revenue was ¥16.17B (¥13.68B in the same period of the previous year, YoY +18.2%), Operating Income was ¥1.31B (¥0.96B, YoY +36.4%), Ordinary Income was ¥1.74B (¥1.09B, YoY +59.1%), and Net Income was ¥1.24B (¥0.76B, YoY +63.8%). In addition to revenue growth, operating leverage from the lower SG&A ratio and the boost from non-operating income, including dividend income and foreign exchange gains, resulted in the profit growth rate significantly exceeding the revenue growth rate.

Factors Affecting Performance

【Revenue】Revenue increased 18.2% YoY to ¥16.17B, representing double-digit growth. By segment, the Electronic Materials and Chemicals Business continued to deliver strong growth, with revenue of ¥7.22B (+28.7%), while the Medical and Piezoelectric-Related Business recorded revenue of ¥1.26B (+33.0%). The Functional Materials Business achieved steady but more modest growth of ¥7.40B (+8.0%). By revenue composition, Functional Materials accounted for approximately 46% and Electronic Materials and Chemicals approximately 45%, making these two businesses the core segments.

【Profit and Loss】Operating Income increased 36.4% YoY to ¥1.31B, and the Operating Income margin improved to 8.1% from 7.0% in the previous year. Against a gross margin of 19.4%, the SG&A ratio declined to 11.3%, with cost efficiencies contributing to profit growth. Ordinary Income increased 59.1% YoY to ¥1.74B, with ¥0.48B in non-operating income—including ¥0.30B in dividend income and ¥0.08B in foreign exchange gains—boosting income at the ordinary income level. Net Income increased 63.8% YoY to ¥1.24B, while the impact of ¥0.02B in extraordinary losses (losses on disposal of fixed assets) was minor. The company achieved higher revenue and profits, with non-operating income adding to improvements at the operating level.

Segment Analysis

The largest segment by segment profit was the Electronic Materials and Chemicals Business, with profit of ¥0.75B (10.4% margin, YoY +32.5%), accounting for more than half of total company profit. The Medical and Piezoelectric-Related Business generated profit of ¥0.22B (17.1% margin), the highest margin company-wide, and expanded sharply by YoY +300.0%. The Functional Materials Business generated profit of ¥0.28B (3.8% margin), relatively low profitability, indicating room for improvement despite having the largest revenue scale. Other Businesses recorded profit of ¥0.06B (9.1% margin, YoY -3.4%), representing a modest decline. The rising contribution of the high-margin businesses—Electronic Materials and Chemicals and Medical and Piezoelectric-Related—drove the improvement in the company-wide Operating Income margin to 8.1%.

Key Financial Metrics

【Profitability】The Operating Income margin improved to 8.1% from 7.0% in the previous year, while the Net Income margin expanded to 7.7% from 5.5%. The gross margin was 19.4%, and the decline in the SG&A ratio to 11.3% supported profit growth at the operating level.【Cash Quality】The company held ¥10.45B in cash and deposits and ¥17.78B in investment securities, reflecting a conservative asset composition. Working capital was substantial, with inventories of ¥9.66B and accounts receivable of ¥18.02B.【Investment Efficiency】ROE was 2.0%; given the high capital base reflected in an Equity Ratio of 68.5%, capital efficiency remained low, partly due to the low total asset turnover ratio.【Financial Soundness】The Equity Ratio was 68.5%, while long-term borrowings were ¥4.80B, indicating a limited debt burden and a stable financial foundation.

Cash Flow Analysis

As the cash flow statement has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥10.45B, slightly below the ¥10.85B level in the same period of the previous year. Accounts receivable were ¥18.02B (¥16.87B in the previous year), while inventories were ¥9.66B (¥9.79B in the previous year), indicating an upward trend in trade receivables accompanying revenue growth. Accounts payable increased to ¥7.80B (¥6.07B in the previous year, +28.6%), reflecting the expansion of procurement and production activities. Given the levels of trade receivables and inventories, a certain amount of funds remains tied up in working capital. Monitoring funding efficiency during the revenue growth phase will therefore be an important focus going forward.

Quality of Earnings

Against Operating Income of ¥1.31B, which indicates the earning power of the core business, ¥0.48B in non-operating income (¥0.30B in dividend income and ¥0.08B in foreign exchange gains) boosted Ordinary Income. This represented approximately 3.0% of revenue. Extraordinary items consisted solely of ¥0.02B in extraordinary losses (losses on disposal of fixed assets), with a minor impact on Net Income; the contribution from one-off factors was limited. The difference between Ordinary Income of ¥1.74B and Net Income of ¥1.24B was primarily attributable to the recording of ¥0.47B in income taxes and other taxes, resulting in an effective tax rate of approximately 27%, a standard level. Comprehensive Income was ¥1.38B, slightly exceeding Net Income of ¥1.24B, mainly due to a ¥0.16B increase in valuation difference on investment securities. The gap between Net Income and Comprehensive Income was limited, and no factor was identified that would materially impair earnings quality.

Earnings Forecast and Guidance

Progress against the full-year forecasts—Revenue of ¥59.50B, Operating Income of ¥2.50B, and Ordinary Income of ¥2.90B—was 27.2%, 52.2%, and 59.9%, respectively, in Q1, substantially ahead of the simple 25% benchmark. In particular, the high progress rates for Operating Income and Ordinary Income reflect SG&A efficiencies and contributions from non-operating income (dividends and foreign exchange), indicating that performance is ahead of schedule against the full-year plan. Given that the earnings forecast was revised during the current quarter, continued monitoring of progress toward the second half remains important.

Shareholder Returns

The full-year dividend forecast is ¥80 (changed from the previous year's actual dividend of ¥20), resulting in a Payout Ratio of approximately 101% against the company's forecast EPS of ¥78.84. As the Payout Ratio is effectively above EPS, achieving the full-year Net Income plan will be a prerequisite for securing the source of dividend payments, although the dividend forecast itself has not been revised. No share buyback was confirmed; however, treasury shares decreased from ¥1.197B in the same period of the previous year to ¥0.426B, indicating movements such as the disposal or cancellation of treasury shares as part of capital policy.

Risk Factors

1. Working capital tied-up: Accounts receivable of ¥18.02B and inventories of ¥9.66B have expanded along with revenue growth, creating a structure in which funds are tied up in these assets. If the revenue growth trend continues, improving collection and inventory management efficiency will be a funding efficiency challenge.

2. Dependence on non-operating income: Of Ordinary Income of ¥1.74B, ¥0.48B consisted of non-operating income (¥0.30B in dividend income and ¥0.08B in foreign exchange gains), items that may fluctuate with market conditions, including equity markets and foreign exchange rates.

3. Segment mix concentration: The Functional Materials Business, which accounts for approximately 46% of revenue, has a profit margin of 3.8%, below the company-wide average. Dependence on the strong growth of the Electronic Materials and Chemicals Business and the Medical and Piezoelectric-Related Business is increasing.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

The Operating Income margin was slightly below the industry median, while the Net Income margin exceeded the median, indicating a relatively efficient level in terms of non-operating income and tax burden.

Growth and Capital Efficiency

The revenue growth rate was substantially above the industry median, positioning the company among the high-growth companies in the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. In addition to higher revenue and profits, operating leverage resulting from the lower SG&A ratio improved the Operating Income margin to 8.1% from 7.0% in the previous year. Growth in the high-margin Medical and Piezoelectric-Related Business and Electronic Materials and Chemicals Business drove the improvement in the company-wide margin.

2. Full-year progress was high, at 52.2% for Operating Income and 68.1% for Net Income, indicating that performance is ahead of schedule, including contributions from non-operating income (dividends and foreign exchange). As non-operating factors may fluctuate depending on market conditions, the quality of full-year earnings will focus on the accumulation of operating performance going forward.

3. The dividend forecast of ¥80 represents a Payout Ratio of approximately 101% against the company's forecast EPS of ¥78.84, making continued achievement of the full-year Net Income plan a prerequisite. The expansion of working capital accompanying increases in accounts receivable and inventories is also a subject for monitoring in terms of funding efficiency.

Theoretical Stock Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market stock price or a recommendation of any specific investment action.

Sensitivity: ¥2,197–¥2,317 at ±1% for the cost of equity, and ¥2,242–¥2,264 at ±0.1 for ω.

Notes:

• Because Net Income progress against the full-year forecast is 68%, exceeding the standard 25%, forecast EPS has been adjusted upward within an upper limit of +10% (because companies ahead of schedule tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated at a somewhat high level.

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value is not a forecast or guarantee of the future stock price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.

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